South Korea is the strongest contender outside the United States and China to benefit from the next phase of the global artificial intelligence (AI) boom, according to a new report by Bank of America (BofA).
The brokerage said the global AI landscape is becoming increasingly concentrated around the US and China, with both countries maintaining significant advantages in investment, technology and infrastructure.
According to the report, the US continues to lead in private AI investment, advanced semiconductor technology and computing infrastructure. China, meanwhile, benefits from its vast manufacturing capacity, lower energy costs and dominance in processed critical minerals essential for AI development.
Rather than attempting to compete directly with the two global leaders, several other economies are positioning themselves to capture AI-driven growth through semiconductor supply chains, data centre investments and wider AI adoption across their economies.
BofA identified South Korea as the leading AI contender outside the US and China in both the short and long term. It said the country combines a strong semiconductor manufacturing industry with rapidly expanding AI adoption, supportive government policies and the ability to convert AI deployment into sustained productivity gains.
The United Arab Emirates also ranked among the leading contenders, supported by substantial government investment, abundant energy resources and one of the world’s highest AI adoption rates. However, BofA noted that geopolitical risks remain a significant source of uncertainty for the Gulf nation.
Canada, Germany, Israel, the Netherlands, Singapore, Switzerland and the United Kingdom were identified as forming a strong second tier of AI leaders, benefiting from favourable policy environments, innovation ecosystems and growing AI capabilities.
Among emerging markets, India was highlighted as the most promising long-term AI challenger.
Although India currently lacks the semiconductor manufacturing capacity of some Asian economies, BofA said it is already one of the world’s largest AI adoption markets, with AI diffusion levels comparable to several advanced economies.
The brokerage said stronger government support and continued job creation could significantly strengthen India’s long-term AI prospects, although labour market disruption remains a key challenge as AI adoption accelerates.
The report also identified Taiwan, Australia and Japan as immediate beneficiaries of the global AI infrastructure expansion due to their strategic roles in semiconductor manufacturing, critical minerals and data centre supply chains. However, it cautioned that these countries must still convert those advantages into broader productivity improvements.
According to BofA, access to abundant and reliable energy is becoming an increasingly important competitive advantage as AI computing workloads and data centre capacity continue to grow.
The brokerage said countries such as Canada, France and the United Arab Emirates are well positioned to benefit from this trend, given their ability to provide stable energy supplies needed to support expanding AI infrastructure.
